An Historical Perspective on Buying Gold Coins
Today, there are two broad varieties of gold coins from which to choose: rare gold coins, such as the Saint-Gaudens Double Eagle (minted from 1907 to 1933) and gold bullion coins, such as the American Eagle gold bullion coin.
But from 1933 to 1975, there were no gold bullion coins, such as the Gold American Eagle, because, believe it or not, it was illegal for United States citizens or foreign residents in the U.S.A. to own gold. During that period, the only gold coins that were permitted for private ownership, and thus eligible for sale, were “gold coins of special interest and value to collectors”—in other words, rare gold coins.
Even so, during most of the period 1933 through the end of Second World War in 1945, few Americans could afford to buy and own rare gold coins. Rare gold coins were a luxury that just could not be justified during the decade of the Great Depression and the four years of World War II from 1941 to 1945.
The few Americans who could afford to buy rare gold coins during the period from 1933 to 1945 were usually the very wealthy and they obtained their gold coins from a few elite, specialized coin dealers (called “numismatists”). These dealers were often unknown to the general public and traveled in strictly upper class socioeconomic circles. It is no wonder that coin collecting got the label “the hobby of kings.”
After the Second World War, America was transformed. It’s economy was transformed by the rapid industrialization and modernization which had occurred to support the arsenal of democracy and America’s society and culture was transformed by the millions of returning servicemen who had made the world safe for democracy, had been to places that no one in America had even heard of before the war and who wanted to start families and live the good life back at home.
This transformation also had an impact on the coin business. In the post-World War II period, more prosperity meant that more people could afford rare gold coins. To be sure, rare gold coins were still not items that the average American could afford to collect, but, nevertheless, more Americans could afford them than ever.
Inevitably, more buyers of rare gold coins meant more dealers of rare gold coins and these new dealers were not always the elite, wealthy individuals that had sole control of the trade back in the 1930s and 1940s.
The post-World War II years saw the establishment of coin shops across America. Not all coin shops could afford to maintain inventories of rare gold coins, but some could and such retail outlets became a viable option for finding at least some lower-end rare gold coins.
Coin shops really boomed in the 1960s and it was not uncommon to find some rare gold coins in just about every shop.
The Legalization of Gold and the Introduction of the Krugerrand
The coin market became even more transformed after 1975, when the law that made it illegal for private collectors and investors in the United States to own gold was suspended.
This was followed by a whole new phenomenon: South Africa’s Krugerrand.
In the late 1970s, the world’s largest gold producing nation, the Republic of South Africa, introduced a new gold coin: the Krugerrand (named for one of the country’s early leaders).
Unlike rare gold coins such as the Saint-Gaudens Double Eagle, the Krugerrand was mass produced on modern, high-speed machinery and was never meant to be rare. Therefore, its value was strictly tied to the one ounce of gold it contained.
A brand new investment category was thus born: gold bullion coins.
Buying Rare Gold Coins and Gold Bullion Coins Today
Today, investors and collectors have several choices when it comes to buying gold coins:
- Coin Dealers
- Coin shows
- Local Coin Shops
- Banks (Usually banks only sell bullion coins.)
- Brokerage houses (Like banks, brokerage houses customarily only sell bullion coins.)
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